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Altria Bonds Give Investors ‘Instant Gratification’ (Update2)  

In credit markets Federal Reserve Chairman Ben S. Bernanke says are broken, the best investment in the first quarter was newly issued corporate bonds.

Buyers earned an average of 2.4 percent, or about $8.5 billion, as the debt outperformed Treasuries, stocks and other corporate securities. Non-financial companies sold a record $332 billion of investment-grade bonds in dollars, pounds and euros in the quarter, according to data compiled by Bloomberg.

To ensure they could raise cash amid the worst financial and economic crisis since the Great Depression, borrowers offered yields that were an average 50 basis points higher than existing debt, according to Bank of America Corp. This so-called new issue concession helped bonds of Altria Group Inc., the largest U.S. tobacco company, rise 7 percent since their sale on Feb. 3.

New corporate debt is “definitely one of the safest plays out there,” said Arthur Tetyevsky, chief fixed-income strategist at CF Global Trading UK Ltd. in New York. “You get instant gratification.”

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